Banks Bonds and Home Loans

PROPERTY24

24 Jul 2012

Banks are granting more 100% home loans but they have raised the deposit requirements for those buyers who do not qualify for 100% loans.

The average home price paid by first-time buyers in June was R615 000 (compared to R597 000 in May), and the average percentage of purchase price required as a deposit by such buyers who did not secure 100 percent home loans rose to 11.5 percent from 10.3 percent in May.

This is according to the latest statistics from BetterBond, South Africa’s biggest mortgage originator, which represent 25 percent of all residential mortgage bonds being registered in the Deeds Office and includes applications to, and bond grants from, all the major lending banks in South Africa.

Rudi Botha, chief executive officer of BetterBond, says these figures show that the percentage of 100 percent home loans being granted rose to 41 percent in June, compared with 37 percent in May.

Botha say the average percentage of purchase price that non-100 percent borrowers were required to pay as a deposit in order to secure a home loan rose in the same month from 17.1 percent to 19.1 percent.

“This coincided with an across-the-board increase in the prices being paid by home buyers and supports our previous observations that there is a deposit ‘sliding scale’ – that is, the higher the home price, the higher the deposit percentage is likely to be.”

In June, he notes, the average home price paid was R857 000, well up from the R838 000 recorded in May and even the R843 000 achieved in April.

This increase combined with the higher percentage deposit required, means that the average buyer in June who did not secure a 100 percent home loan was required to pay a deposit of some R164 000 compared to about R143 000 the month before, he says.

However, he says buyers in certain sectors of the market did not need that much cash.

The average home price paid by first-time buyers in June was R615 000 (compared to R597 000 in May), and the average percentage of purchase price required as a deposit by such buyers who did not secure 100 percent home loans rose to 11.5 percent from 10.3 percent in May.

Thus the average first-time buyer only needed about R71 000 as a deposit, says Botha.

He says most of the 100 percent home loans that are being granted currently are going to buyers at the lower end of the price scale.

“This is good news for the real estate industry as it is encouraging and helping more people to gain entry to the property market and steadily expanding the size of that market.”

Botha adds that first-time buyers currently account for 41 percent of the total number of loan applications and about 36 percent of all loans granted

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